UK Gender Pay Gap Report2018

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Creating a positive Diversity & Inclusion culture at AB is crucial to our success. We fully support gender equality and are proud to employ colleagues from a wide range of backgrounds, experience, capabilities and levels of ambition. We are relentless in our approach to create the right environment for everyone to have an equal opportunity for career advancement regardless of gender.

This is the second year we have published our UK gender pay gap data, measuring the difference between the aggregate pay for all men and women. This is despite our current UK legal entities not exceeding the required reporting threshold of 250 employees. We believe in transparency and will continue to disclose our UK gender pay gap annually, on a voluntary basis.

While women and men continue to be paid equally for performing equivalent roles in our business, we do still have a gender pay gap. This is because we, like many others in our industry, currently have more men than women in leadership and senior roles across our UK business. To close the gender pay gap we must achieve better representation of women in these senior positions and therefore greater gender pay balance.

We continue to analyze the pay gap data and are fully committed to maximizing any opportunities to address this gap. Such efforts are not open to debate. It is only by striving towards to our goals that we can succeed in attracting and retaining the diverse range of talent that we need to serve our clients and succeed in our business.

Jamie Hammond

SVP/CEO of ABL & Head of EMEA Client Group

Introduction

Gender Pay ReportingThe gender pay gap is a measure of the difference between the average pay and bonus of men and women across an organization irrespective of role and seniority.

This is different to equal pay, which is the legal requirement to pay the same to men and women who are doing work of equal value.

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The data includes the mix of men and women that form our permanent UK workforce as at April 2018.

The mean and median pay are based on what was paid in the April 2018 payroll.

Who is Included in the Data?

UK Gender Pay Gap Report 2018

64%MEN

36%WOMEN

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UK Gender Pay Gap For 2018

UK Fixed Pay

Proportion of males and females by pay quartileThe charts below show the gender balance of UK employees in each pay band (dividing our UK employees into four equal bands): 81 per cent of male employees received

a bonus.

MALES FEMALES

47% 43%53% 57%

LOWEST QUARTILE2

64%

QUARTILE3

92%

HIGHEST

The average (mean) hourly rate of fixed pay received by male employees is 34 per cent more than the average(mean) hourly rate received by female employees.

The midpoint (median) of the range of rates of hourly fixed pay received by male employees is 33 per cent more than the midpoint (median) of the range of rates of hourly fixed pay received by female employees.

34%

33%

The average (mean) value of bonuspay received by male employees is 78per cent more than the average (mean) value of bonus pay received by female employees.

The midpoint (median) of the rangeof the values of bonus pay received bymale employees is 57 per cent morethan the midpoint (median) of the range of the values of bonus pay received by female employees.

78%

57%

UK Bonus Pay

81%

94 per cent of female employees received a bonus.

94%

UK Gender Pay Gap Report 2018

36% 8%

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The pay figures highlight the demographic challenges in our UK business and the wider asset management industry as a whole. Although we have made some progress in the lower to and mid paying quartiles, our continuing gender pay gap is driven by the disparity in the highest-paying quartile. This continues to be predominantly due to:

+ More men than women in leadership, investment management and sales distribution roles;

+ More women than men in administrative and support roles;

+ More men than women in roles with higher incentive opportunities, these being, senior management, investment management and sales roles;

AB are conscious of this pay gap and continue to target improvement opportunities through recruitment and other initiatives across our business.

We are confident that our gender pay gap does not result from a disparity in pay levels for equivalent roles. We have clear policies and a pay and performance structure which is based on meritocracy, irrespective of gender. We are completely committed to ensuring compliance with equal pay legislation and to equal opportunities for both genders.

Our Challenges with the Gender Pay Gap

UK Gender Pay Gap Report 2018

Compared to 2017, the proportion of females in the lowest-paying quartile has fallen, and men now make up the majority in this group. The proportion of females in the higher-paying quartiles two and three increased significantly in 2018. However, the proportion of females in the highest quartile has fallen.

More women received a bonus than in the preceding year, and materially fewer men received a bonus. We believe that our bonus awards recognize exceptional contributions by our staff irrespective of gender.

These bonus gap numbers have reduced only modestly over the previous year, despite a broad improvement in females’ participation in the fixed pay band quartiles. The bonus division is heavily influenced by investment performance, with more men than women in the senior roles that are most highly rewarded with investment performance-related bonuses. These bonuses are variable over time, but in 2018 were relatively high after a good period for investment performance. This investment performance effect created a wider gender pay gap than we would otherwise expect.

We conclude that our goal to achieve better gender balance is progressing across many levels of our business. Our priority is to continue to provide the opportunities and working environment for more women to advance into the most senior leadership, investment management and distribution roles which dominate the highest-paying quartile.

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To reduce the gender pay gap, we must aspire to achieve better representation of women in all roles at all levels of our business, especially in leadership and other senior positions.

We acknowledge there is no single or quick solution to the imbalance which exists in our business today, particularly given our ongoing low rate of senior management turnover. Sustained efforts continue in order to achieve meaningful and lasting change.

The way we can achieve the greatest impact is to maintain our efforts of supporting our female staff to attain senior and highly-remunerated roles. We are therefore sharpening our focus on:

1. Encouraging and supporting women to progress into senior leadership roles.

2. Through our recruitment efforts, building a strong pipeline of junior female talent in all areas of our business.

3. Creating a flexible and supportive working culture that supports the needs of a diverse workforce and so better enables women to progress in their careers.

Related ongoing and new initiatives include:

Senior Leadership Accountability + Senior Level Buy-In: AB’s entire Global Executive Team and

Board of Directors are committed to the criticality of a Diversity and Inclusion culture.

+ The Board composition for our UK business now reflects a more even balance between males and females. This signals our aspiration to achieving gender equality at senior levels.

+ AB Diversity Champions Council: a team of senior leaders charged with championing diversity and inclusion efforts at AB globally by leading the efforts of either a specific business

unit or the efforts of a specific demographic group (including women, people of colour, and LGBT etc). A key purpose of the Council is to instill accountability at the senior leadership level to ensure AB is making every effort to increase diversity and improve inclusion across our firm.

+ We have a dedicated Head of Diversity and Inclusion and a Diversity Campus Recruiter, who work with senior leadership and Human Capital worldwide to drive the four strategic pillars of recruitment, senior leadership accountability, development of diverse talent, and increasing brand visibility. Recently, the Diversity and Inclusion team has been further boosted by two additional hires highlighting AB’s commitment to diversity initiatives.

Continuous Employee Development + AB has developed and implemented leadership programmes

and initiatives for our female employees to help them develop the leadership skills necessary to move into more senior positions. These efforts continue both in the UK and globally across the firm. A key goal is to develop female talent to strengthen the leadership pipeline.

+ Inclusive Leadership /Unconscious Bias training has been delivered to our senior leaders to exhibit and model inclusive behaviour.

+ Senior Vice President Women’s Offsites – these events work towards cultivating an inclusive and diverse environment in which women can build and expand on their leadership roles. The offsite provides an opportunity for Senior Vice President women across the globe to come together to focus on topics that are meaningful to this population while also engaging in professional development. Past offsite topics have focused on executive presence, gravitas, the power of your voice, and communicating your commercial impact.

Levelling the Playing Field

UK Gender Pay Gap Report 2018

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+ Career Catalyst program - AB’s Career Catalyst Program is a six-month initiative that pairs Senior Vice President level col-leagues with ethnically diverse and female Vice President aspiring leaders. These senior colleagues play the role of a coach, providing the participants with guidance around focusing on their career development. This program is designed to provide the participants with the tools they need to manage their own career development.

+ The Chartered Financial Analyst (CFA) qualification is key to advancing into more senior and highly-remunerated roles. AB provides an incentive program for all employees to assist them with their CFA studies.

+ We offer external coaching and internal mentoring programs across the business to further develop our rising talent.

2018 Initiative #1 Career Catalyst programmeAB’s Career Catalyst Programme is a six-month initiative that pairs Senior Vice President level colleagues with ethnically diverse and female Vice President aspiring leaders. These senior colleagues play the role of a coach, providing the participants with guidance around focusing on their career development. This programme is designed to provide the participants with the tools they need to manage their own career development.

2018 Initiative #2 Senior Vice Presidents Women’s offsiteOur Senior Vice President Women’s leadership offsite strives to cultivate an inclusive and diverse environment at AB in which women can build and expand on their leadership roles. The offsite provides an opportunity for Senior Vice President women across the globe to come together to focus on topics that are meaningful to this population while also engaging in professional development.

Diversity and Inclusion Initiatives + Across the global business we delivered a “Day of Understanding”

program as part our commitment to the CEO Action for Diversity and Inclusion. The purpose of the event was to create a safe space to engage in open, honest, and empathetic conversations in the workplace. By encouraging an ongoing dialogue, we are building trust, cultivating open-mindedness, and reinforcing our commitment to a culture of inclusivity.

+ Anti-harassment training has been implemented across the global business to ensure all staff are aware of the potential impact of

their speech and actions towards their colleagues and our zero tolerance towards any form of harassment behaviour.

Recruitment + We work with diversity-focused search firms who help us think

creatively about how we shape roles to attract senior female talent.

+ We have implemented mandatory diverse interviewers for all open roles globally, including gender diversity on all interviewing panels.

+ We have initiated a formal selection process for all Senior Vice President roles within each business area. This will ensure diversity of the candidate slate, a platform to thoroughly consider diverse candidates against firm hiring goals and, ultimately, establish a climate of inclusion when discussing candidate’s skills, experience and capabilities.

+ For senior level roles we now leverage the use of a Diversity Tracker to monitor diversity of candidates during the interview process.

Employee-Led Initiatives + We leverage our multiple Employee Resources Groups (ERGs) to

drive engagement of our diverse talent and promote an inclusive workplace. In particular, our Synergy groups are dedicated to cultivating an inclusive and diverse environment in which women at AB can build and expand their leadership roles. Through women-led initiatives, this ERG works together with both female and male colleagues to promote a dynamic culture of mentoring, networking, motivating and empowering women and assisting with career advancement.

+ We have established a requirement of at least one Diversity & Inclusion related objective annually for all employees with the goal of driving deeper inclusiveness among the staff as well as broadening the support for our efforts throughout the firm.

Other Initiatives + We continue to support enhanced flexible working practices and

more agile ways of working which allows our employees more control over when, where and how they work.

+ Providing support for women and men returning after career breaks, including maternity leave, through our “Return to Work Days” initiative.

UK Gender Pay Gap Report 2018

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